Report: Manufacturers Can't Innovate Without Talent

A dearth of skilled manufacturing workers and increasing pressure to innovate quickly are two key factors threatening future growth for manufacturers worldwide, according to a report by the World Economic Forum and Deloitte Touche Tohmatsu Ltd.

About 10 million manufacturing jobs worldwide are vacant because of a growing skills gap, the report stated.

"In the race to future prosperity, nothing will matter more than talent," said Craig Giffi, Deloitte vice chairman and co-author of the "The Future of Manufacturing: Opportunities to Drive Economic Growth" report released April 25.

The report cited a 2011 Manpower survey that showed 34% of global employers reported difficulty filling jobs because of a talent shortage. Employers in Japan, India, Brazil and the United States were the most likely companies to report problems identifying skilled workers.

Manufacturers that can overcome the skilled-worker challenge will rise above their global competitors, Giffi said.

Companies are collaborating with educators to reduce the impact of the talent shortage, according to the report.

This includes skills certification efforts by organizations such as the National Association of Manufacturers' Manufacturing Skills Certificate System and a program in India led by an IT outsourcing company to train aerospace and mechanical design engineers.

Innovation Rules

Manufacturers will also need to innovate at an accelerated pace to stay ahead of competitors.

Research and development spending is a critical component of innovation growth. But other socioeconomic factors, including education, infrastructure and policy, will impact future innovation.

Policies that encourage R&D investment by focusing on such areas as patent processing, tax code and intellectual property protection will encourage more innovative developments, the report said.

The most successful countries will fund R&D initiatives that align with the nation's strategic priorities. China, for instance, is making significant investments in sectors that are critical to the nation's development, including biotech, energy efficiency and next-generation information technology.

Developing and attracting highly skilled researchers and engineers will also impact manufacturers' ability to innovate.

Companies considered more innovative grew their net income about two times faster than their "non-innovative counterparts" between 2006 and 2010, said John Moavenzadeh, senior director for Mobility Industries at the World Economic Forum.

"Meanwhile, countries that are more successful at fostering innovation performed better when it comes to both gross domestic product and GDP per capita," he said.

Discuss this Article 1

The shortage of good 'sustainability' minded talent has been looming on the horizon for quite some time now. What a lot of companies do not realize is that hiring people of this caliber pays for the effort in a short time. Much like embracing LEAN manufacturing the efforts can pay back quickly and result in significant savings of 40-60% over previous methods. Understanding the Toyota Manufacturing System and embracing LEAN will drastically lower costs and improve operations efficiency. Looking at the use of outdated or incompatible processes with newer designed products can save a bundle.

There are many things that can be done to decrease operational costs besides the obvious cuts in electricity by changing to properly designed LED lighting that will last for many years, replacing older pumps and motors with more modern Variable Frequency Drives (VFD) that operate more efficiently, adopting three phase motors for high consuming areas where it is possible, adopting CAD design to decrease engineering efforts resulting in quicker time to market, adopting solid-state electronics in control circuitry and switching systems to reduce down time and increase efficiency, and many other areas. Performing an audit by a seasoned professional that is used to manufacturing can save a company a bundle if done properly.

Globally speaking roughly a third of the electricity is consumed by fixed speed motors. While replacing older fixed-speed motors may appear to be expensive to companies the benefits of less electricity used and better efficiency in the operations will overwhelm the decision process once convinced.

Many commercial buildings try to look at adopting solar because it is the fad to do so and be able to fill the marketing and press releases. More often than not this is a first misstep in my opinion. The first thing every company should do is replace their lighting with highly efficient, low heat output, robust, LED bulbs. If the proper bulbs are chosen it will likely be the last time the bulbs will be replaced until after you retire. In commercial buildings the electricity consumed by lighting is 40-60% of the overall bill depending on the industry and building. Normal office buildings will likely edge to 60% simply due to the lights needed for the cubicles and offices. Industrial plants with high torque motors and heavy machinery might only be 10% of the bill for lighting but I would bet it is higher. Changing to LED lighting in those environments would be beneficial for other reasons though like simply the cost of the man lift and the union labor costs needed to change the bulbs when they go out. After replacing the bulbs THEN they should look at designing the energy producing system they first conceived and it would be a smaller system.

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